Recent economic data have outperformed the ECB’s own projections, easing concerns that global trade disruptions would significantly undermine growth. Exporters have adjusted more effectively than expected to U.S. tariff pressures, while stronger domestic demand in Germany has helped offset lingering weakness in manufacturing activity across the bloc. Together, these dynamics have allowed the euro zone economy to grow close to its estimated potential rate.

Inflation developments support the case for policy stability. Headline inflation has hovered around the ECB’s 2% objective, driven primarily by firm services-sector price growth, while underlying price pressures appear contained. With inflation expected to remain close to target over the medium term, policymakers are seen as having little urgency to adjust rates in either direction.

Against this backdrop, the ECB is likely to revise its growth and inflation forecasts modestly higher, effectively drawing a line under the rate-cutting cycle that halved policy rates from their peak over the past year. While some speculation has emerged around the possibility of a future rate hike, this debate is widely viewed as premature given persistent spare capacity in manufacturing and only tentative signs of an industrial recovery.

ECB President Christine Lagarde is expected to avoid offering guidance on the direction of the next policy move, instead emphasising data dependence and the need to assess how current conditions evolve. Markets broadly expect rates to remain on hold well into 2026 and 2027, reinforcing the perception that the ECB is comfortable with its current stance.